Digital analytics are fundamental to any business that is serious about having an online presence. This is an undisputed fact that most marketing directors are keen to embrace nowadays. But how much should a company be spending on digital analytics? Is your company spending the right amount of money on analysing its web traffic data?

Companies typically don't have any problem with allocating significant portions of their digital marketing budget to the purchase of PPC, display and email marketing campaigns. However, the same can't be said when it comes to allocating money to the human resources involved in the definition, implementation and analysis of those campaigns. This can be easily seen by Googling "Digital marketing manager" and browsing through job descriptions: most of them require profiles who are supposed to be qualified in all areas of digital marketing, from SEM to SEO, display, email marketing, social media and digital analytics.

If we compare this to the medical sector, it's as if you tried to open a clinic and only hired one general practitioner instead of hiring 5 specialised doctors. You might save some money at the beginning, but would surely end up being sued down the line because your patients were poorly attended by under qualified staff. Companies who wish to be competitive over the internet clearly need to evolve from a generalist perspective to a specialised one when hiring digital marketing staff, and this also applies to the area of digital analytics.

How to measure your digital analytics ROI

Back in the good old days of TV and Radio advertising, companies couldn't accurately measure the return on investment of their marketing department, for a very simple reason: you couldn't scientifically measure whether people who were watching your ads bought your products as a consequence of it. Managers mostly had to rely on gut feelings and intuition in order to figure out which campaigns were performing better and why.

The internet dramatically changed the world of advertising. Companies are now theoretically able to measure the return on investment of every single dime spent on digital campaigns. And that also includes the pay checks of the people who are in charge of getting the most out of your online marketing budget by analysing your website's traffic and conversions.

The ROI of a company who went for a Junior Digital Analyst

Let's imagine your company runs a business that generates a total of 3000 leads per month for a monthly profit of 50.000€. The following scenario shows how hiring a junior digital analyst who doesn't have sufficient expertise to significantly increase your conversion rates would have a negative impact on your marketing ROI.

The ROI of the same company who went for a Senior Digital Analyst

The following scenario shows how hiring a senior digital analyst with sufficient expertise to significantly increase your conversion rates would positively impact your marketing ROI, in spite of the additional marketing costs caused by a higher pay check.

The Excel spreadsheet with these tables and their predefined formulas can be downloaded here for those who wish to apply this method to their own business model and find out whether they're allocating the right amount of money to digital analytics pay checks.

This method of calculating the value of a digital analyst in terms of ROI is very straightforward and could be applied to most businesses who use conversion rates as their main KPI. The fact that everything is quantifiable in digital marketing means you can measure the ROI of every single one of your online marketing staff, as opposed to other areas of a company whose return on investment might be more difficult to quantify as they don't have a direct impact on sales.

The above examples would be one way to put into numbers the old saying: "If you think hiring an expert is expensive, wait until you hire an amateur". Hiring cheap profiles can actually result in profit loss, and companies would be wise to allocate enough of their marketing budget to make sure their digital analyst has enough expertise in order to significantly improve conversion rates.